Subramani v. Wells Fargo Bank, N.A. et al

Filing 33

Order by Hon. Samuel Conti granting in part and denying in part 25 Motion to Dismiss.(sclc2, COURT STAFF) (Filed on 10/31/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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)
)
KARTHIK SUBRAMANI,
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)
Plaintiff,
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)
v.
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WELLS FARGO BANK N.A., FIDELITY )
NATIONAL TITLE COMPANY, and DOES )
1-100,
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Defendants.
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)
)

Case No. C 13-1605 SC
ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS

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I.

20

INTRODUCTION
Now before the Court is Defendant Wells Fargo Bank N.A.'s

21

("Defendant") motion to dismiss Plaintiff Karthik Subramani's

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("Plaintiff") first amended complaint.

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("MTD").

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("Reply"), and appropriate for decision without oral argument, Civ.

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L.R. 7-1(b).

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DENIES in part Defendant's motion to dismiss.

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///

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///

ECF Nos. 24 ("FAC"), 25

The matter is fully briefed, ECF Nos. 27 ("Opp'n"), 28

As explained below, the Court GRANTS in part and

1 II.

BACKGROUND

2

This action arises from a $479,600 mortgage loan (the "Loan")

3

obtained by Plaintiff from Defendant on October 18, 2006, recorded

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by an adjustable-rate promissory note and secured by a deed of

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trust ("DOT") against residential real property in Livermore,

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California.

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Plaintiff agreed to repay the borrowed $479,600 or risk

8

foreclosure, and that "[t]he Note or a partial interest in the note

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(together with this Security Instrument) can be sold one or more

Compl. ¶¶ 10-11, Ex. A ("DOT").

The DOT states that

United States District Court

For the Northern District of California

10

times without prior notice to [Plaintiff]."

Id. at 11 ¶ 20.

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Defendant was the original lender under the DOT, and Fidelity

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National Title Insurance Company ("FNTIC") -- purportedly not the

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same entity as the non-appearing defendant FNTC -- was the original

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trustee.
Plaintiff alleges that Defendant first sold the Loan to Wells

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Fargo Asset Securities Corporation ("WFASC") sometime around

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October 24, 2006.

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Plaintiff's Loan (consisting of the note and DOT) with other

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mortgages into a mortgage-backed securities pool, the Wells Fargo

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Mortgaged Backed Securities 2006-AR18 Trust, Mortgage Pass-Through

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Certificates, Series 2006-AR18 (the "WFMBS 2006-AR18 Trust").

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¶ 5.

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2006 with the execution of a pooling and servicing agreement

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("PSA").

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was to prohibit assignment of the DOT and note before the trust's

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"Closing Date" of October 24, 2006.

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28

Soon after that, WFASC allegedly bundled

Id.

The WFMBS 2006-ARIB Trust had been established on October 1,

Id. ¶ 15.

According to Plaintiff, one effect of the PSA

See id. ¶ 23.

On July 23, 2009, Plaintiff received a notice of default
("NOD") from First American Title Insurance Company acting as an

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1

agent for First American Loanstar Trustee Services ("First American

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Loanstar") as purported "Agent for the Current Beneficiary."

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Compl. Ex. B ("NOD 1").

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associated with that NOD suggested without stating that Defendant

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was the "current beneficiary" of the Loan.

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According to Plaintiff, statements

See Compl. ¶ 19.

On August 25, 2009, First American Loanstar, acting as

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"attorney in fact for [Defendant]," issued a Substitution of

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Trustee ("SOT 1"), substituting itself as trustee.

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(SOT).

United States District Court

For the Northern District of California

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Id. ¶ 23, Ex. C

Plaintiff's first NOD was rescinded on September 10, 2010, id.

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Ex. D ("Rescission of NOD 1"), but Plaintiff defaulted again and a

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second NOD was recorded on May 10, 2011, id. Ex. E ("NOD 2").

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second NOD was issued on May 4, 2011, by LSI Title Company acting

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as agent for FNTC.

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that Defendant was the original beneficiary under the DOT, but did

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not state who the current beneficiary was.

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The

According to Plaintiff, the second NOD stated

See id. ¶ 27.

On May 6, 2011, between the issuance and recordation of the

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second NOD, Defendant issued a second Substitution of Trustee ("SOT

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2") appointing FNTC as substitute in place of FNTIC as trustee

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under the DOT.

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11, 2011, the second SOT was recorded.

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Id. Ex. F (SOT 2).

Three months later, on August
Id. ¶ 31.

Plaintiff did not cure his second default, and on August 11,

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2011 -- the same day the second SOT was recorded -- FNTC, acting as

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trustee under the DOT, issued and caused recording of the Notice of

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Trustee Sale.

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2012, FNTC sold Plaintiff's Property in a foreclosure sale to non-

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party California Equity Management Group, Inc., and issued the

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Trustee's Deed Upon Sale ("TDUS") on August 15, 2012.

Id. Ex. G ("NOTS").

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A year later, on August 9,

Id. Ex. H.

1

Plaintiff contends that all of the legal documents described

2

above were void because Defendant was no longer the valid lender in

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the DOT, or even an agent of a successor beneficiary after it sold

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the Loan in 2006.

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Defendant did not assign the DOT or endorse the note pursuant to

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the PSA.

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California law regarding the endorsement, assignment, and

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recordation of notes and DOTs.

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states that after Defendant sold the Loan, neither Defendant nor

See id. ¶¶ 22-23.

See id. at 3-4 ¶¶ 4-6.

According to Plaintiff,

Nor did Defendant abide by

See id. ¶ 14.

Plaintiff therefore

United States District Court

For the Northern District of California

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anyone else had any right to or interest in the Loan, so all legal

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notices associated with the note and DOT -- including the SOTs,

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NODs, and the foreclosure sale itself -- are illegal and void.

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On these facts, Plaintiff asserts eight causes of action: (1)

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wrongful foreclosure; (2) constructive fraud; (3) cancellation of

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fraudulent instruments; (4) violation of California's nonjudicial

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foreclosure statute, Cal. Civ. Code § 2934a(a)(1)(A); (5) unjust

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enrichment; (6) violation of the federal Truth-in-Lending Act

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("TILA"), 15 U.S.C. § 1601 et seq.; (7) violation of California's

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Unfair Competition Law ("UCL"), Bus. & Prof. Code Section 17200;

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and (8) declaratory relief.

Defendant now moves to dismiss.

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III. LEGAL STANDARD

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A.

Motions to Dismiss

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A motion to dismiss under Federal Rule of Civil Procedure

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12(b)(6) "tests the legal sufficiency of a claim."

26

Block, 250 F.3d 729, 732 (9th Cir. 2001).

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on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory."

4

Navarro v.

"Dismissal can be based

1

Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

2

1988).

3

should assume their veracity and then determine whether they

4

plausibly give rise to an entitlement to relief."

5

Iqbal, 556 U.S. 662, 679 (2009).

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must accept as true all of the allegations contained in a complaint

7

is inapplicable to legal conclusions.

8

elements of a cause of action, supported by mere conclusory

9

statements, do not suffice."

"When there are well-pleaded factual allegations, a court

Ashcroft v.

However, "the tenet that a court

Threadbare recitals of the

Id. (citing Bell Atl. Corp. v.

United States District Court

For the Northern District of California

10

Twombly, 550 U.S. 544, 555 (2007)).

11

complaint must be both "sufficiently detailed to give fair notice

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to the opposing party of the nature of the claim so that the party

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may effectively defend against it" and "sufficiently plausible"

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such that "it is not unfair to require the opposing party to be

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subjected to the expense of discovery."

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1202, 1216 (9th Cir. 2011).

17

The allegations made in a

Starr v. Baca, 652 F.3d

On a motion to dismiss pursuant to Rule 12(b)(6), a district

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court may "consider unattached evidence on which the complaint

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'necessarily relies' if: (1) the complaint refers to the document

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[and the document] is central to the plaintiff's claim; and (3) no

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party questions the authenticity of the document."

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v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. 2011).

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United States

If the Court dismisses the complaint, it must then decide

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whether to grant leave to amend.

The Ninth Circuit has "repeatedly

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held that a district court should grant leave to amend even if no

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request to amend the pleading was made, unless it determines that

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the pleading could not possibly be cured by the allegation of other

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facts."

Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000)

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1

(citations and internal quotation marks omitted).

2

B.

Rule 9(b)

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Claims sounding in fraud are subject to the heightened

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pleading requirements of Federal Rule of Civil Procedure 9(b),

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which requires that a plaintiff alleging fraud "must state with

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particularity the circumstances constituting fraud."

See Kearns v.

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Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009).

"To satisfy

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Rule 9(b), a pleading must identify the who, what, when, where, and

9

how of the misconduct charged, as well as what is false or

United States District Court

For the Northern District of California

10

misleading about [the purportedly fraudulent] statement, and why it

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is false."

12

Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks

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and citations omitted).

United States ex rel Cafasso v. Gen. Dynamics C4 Sys.,

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IV. DISCUSSION

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A.

Wrongful Foreclosure

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Plaintiff alleges that Defendant wrongfully foreclosed on the

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Property, because the chain of title was broken when Defendant sold

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its interests in the Loan.

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for the reasons discussed below.

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Defendant moves to dismiss this claim

Defendant's primary argument -- that Plaintiff is claiming

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that securitization itself invalidates the initiation of

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foreclosure proceedings -- subtly misconstrues Plaintiff's

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complaint.

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Defendant's flawed procedures in attempting to securitize the loan

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that broke the chain of title on which Defendant relied.

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clear, Plaintiff is not simply alleging that assignment of the Loan

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to a trust pool provides standing to challenge the securitization.

See MTD at 5-6.

Plaintiff's point is that it was

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To be

1

That argument has been roundly dismissed in this Court.

2

Flores v. GMAC Mortg., LLC, No. C 12-794 SI, 2013 WL 2049388, at *2

3

(N.D. Cal. May 14, 2013) (listing cases) Niranjan v. Bank of

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America, N.A., No. 12-05706 WHA, 2013 WL 1701602, at *2 (N.D. CAl.

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Apr. 18, 2013) (same).

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that are subtly different: Defendant's transfers are void because

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Defendant did not assign the DOT or endorse the note in accordance

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with California law; Defendant tried to transfer the Loan after the

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PSA's October 24, 2012 deadline; and Defendant did not even assign

United States District Court

For the Northern District of California

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11

See, e.g.,

Plaintiff brings a variety of other claims

the Loan or the trusteeship to the correct parties.
To the extent Plaintiff relies on violations of the PSA or any

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other agreements among third parties, Plaintiff's claim fails.

As

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this Court has often explained, plaintiffs who are not parties to

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PSAs lack standing to challenge that aspect of the securitization

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process's validity.

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N.A., No. C-12-3061 EMC, 2012 WL 4371410, at *2 (N.D. Cal. Sept.

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24, 2012).

18

California Court of Appeals case, Glaski v. Bank of America, N.A.,

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218 Cal. App. 4th 1079 (Cal. Ct. App. 2013), in which the court

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held that under New York law, a securitized mortgage trustee's

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acceptance of a loan after the trust's closing date would be void

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in contravention of the trust document and would jeopardize the

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trust's special tax status, id. at 1094-95.

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that the Court should ignore Glaski as stating the minority rule.

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Defendant urges the Court to follow Jenkins v. JP Morgan Chase

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Bank, N.A., 216 Cal. App. 4th 497 (Cal. Ct. App. 2013).

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held that an unrelated third party to an alleged securitization

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lacked standing to enforce any agreements (like a PSA) relating to

See Almutarreb v. Bank of N.Y. Trust Co.,

On this point, Plaintiff contends that a recent

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Defendant counters

Jenkins

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such transactions, and that the third party could not have been a

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victim to any invalid transfer because her obligations under the

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note never changed.

4

from the Ninth Circuit or the California Supreme Court, the Court

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follows Jenkins, which appears to state the majority rule.

6

Newman v. Bank of N.Y. Mellon, No. 1:12-CV-1629 AWI GSA, 2013 WL

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5603316, at *3 n.2 (E.D. Cal. Oct. 11, 2013) ("Glaski is in a clear

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minority" on this issue); Diunugala v. J.P. Morgan Chase Bank,

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N.A., No. 12-cv-2106-WQH-NLS, 2013 WL 5568737, at *8 (S.D. Cal.

Id. at 515-16.

On this point, absent guidance

See

United States District Court

For the Northern District of California

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Oct. 3, 2013) (stating same).

Accordingly, the Court DISMISSES

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Plaintiff's wrongful foreclosure claim to the extent that it is

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predicated on Defendant's alleged violation of the PSA or any other

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third-party agreements related to the Loan's securitization.
However, the Court finds that at the 12(b)(6) stage, Plaintiff

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has sufficiently stated a claim for wrongful foreclosure based on

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his allegations that Defendant's 2006 sale of Plaintiff's DOT

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precluded Defendant from retaining a beneficial interest in the

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DOT.

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(N.D. Cal. 2012).

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Defendant directed the wrong party to issue Notices of Default,

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that Defendant is not the true beneficiary, and that Defendant

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failed to abide by the rules regarding transference of the Loan.

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All of these allegations are supported by specific enough facts to

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state a plausible claim at this point.

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cases Defendant cites, in which the plaintiffs rely solely on

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violations of a PSA or securitization in itself.

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(citing cases).

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DENIED.

See Barrionuevo v. Chase Bank, N.A., 885 F. Supp. 2d 964, 975
Plaintiff has sufficiently alleged that

This case is not like the

See MTD at 5-6

Defendant's motion to dismiss on these grounds is

Defendant may, of course, raise this issue again in a

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2

later motion.
Defendant also argues that tender is required to challenge a

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foreclosure sale or quiet title.

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the amount of secured indebtedness in this case, Defendant contends

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that the case should be dismissed.

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that California law does not require tender if he alleges that

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Defendant's title is void, as he has in this case.

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9

Since Plaintiff failed to tender

MTD at 4-7.

Plaintiff responds

Opp'n at 8.

Generally, the "tender rule" applies to claims to set aside a
trustee's sale for procedural irregularities or alleged

United States District Court

For the Northern District of California

10

deficiencies in the sale notice.

11

Bank, N.A., 926 F. Supp. 2d 1081, 1092 (N.D. Cal. 2013).

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rationale behind the rule is that if plaintiffs could not have

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redeemed the property had the sale procedures been proper, any

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irregularities in the sale did not result in damages to the

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plaintiffs."

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However, tender may not be required where doing so would be

17

inequitable.

18

App. 1997).

19

sale is void, rather than simply voidable," as when an incorrect

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trustee forecloses on a property.

21

No. C-11-2899 EMC, 2011 WL 6294472, at *4 (N.D. Cal. Dec. 15, 2011)

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(citing Dimock v. Emerald Properties LLC, 81 Cal. App. 4th 868, 876

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(Cal. Ct. App. 2000)).

24

has sufficiently alleged that the foreclosure sale was void, Compl.

25

¶¶ 81-85, the Court declines to dismiss the complaint based on

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Plaintiff's failure to allege tender.

27
28

See Lester v. J.P. Morgan Chase
"[T]he

Id. (internal citations and quotations omitted).

Onofrio v. Rice, 55 Cal. App. 4th 413, 424 (Cal. Ct.
Courts have found exceptions to the tender rule if "a

See Tamburri v. Suntrust Mortg.,

Under these circumstances, since Plaintiff

Defendant also contends that Gomes v. Countrywide Home Loan,
Inc., 192 Cal. App. 4th 1149 (Cal. Ct. App. 2011), requires the

9

1

Court to dismiss Plaintiff's challenges to the foreclosure.

MTD at

2

7-8.

3

California Civil Code § 2924(a)(1) does not "provide for a judicial

4

action to determine whether the person initiating the foreclosure

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process is indeed authorized."

6

Gomes is inapposite.

In Gomes, the California Court of Appeals held that

Id. at 1155.

It involved whether the party selling

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the foreclosed property was authorized to do so by the owner of the

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promissory note, not whether there was some infirmity in the

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assignment process leading to wrongful foreclosure.

Id.

In this

United States District Court

For the Northern District of California

10

case, Plaintiff does not seek a determination of whether Defendant

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may foreclose.

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support for this contention.

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The Court therefore finds that Gomes does not preclude Plaintiff

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from challenging Defendant's standing to foreclose.

15

He alleges that it cannot and provides factual
See Lester, 926 F. Supp. 2d at 1092.

Accordingly, Plaintiff's wrongful foreclosure claim survives

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except to the extent that it is based on Defendant's alleged

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violation of the PSA.

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B.

Cancellation of Fraudulent Instruments

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California Civil Code section 3412 provides that a "written

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instrument, in respect to which there is a reasonable apprehension

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that if left outstanding it may cause serious injury to a person

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against whom it is void or voidable, may, on that person's

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application, be so adjudged and ordered to be delivered up or

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canceled."

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Plaintiff contends that the legal documents at issue in this

26

case -- the SOTs, the TDUS, as well as the DOT -- are void for the

27

reasons explained above.

28

it did under Plaintiff's wrongful foreclosure claim, that because

Compl. ¶¶ 99-101.

10

Defendant argues, as

1

those claims are based on the Loan securitization and the

2

foreclosing beneficiary's standing to commence foreclosure, this

3

cause of action must fail.

4

Court rejects Defendant's arguments and declines to dismiss

5

Plaintiff's Section 3412 claim on those grounds.

6

MTD at 9.

As discussed above, the

However, since Defendant is correct that California Civil Code

7

section 2932.5 does not apply to deeds of trust -- only to

8

mortgages -- Plaintiff's claim is dismissed to the extent that it

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relies on a violation of Civil Code section 2932.5.

Calvo v. HSBC

United States District Court

For the Northern District of California

10

Bank USA, N.A. 199 Cal. App. 4th 118, 123 (Cal. Ct. App. 2011) ("It

11

is well established that section 2932.5 does not apply to trust

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deeds, in which the power of sale is granted to a third party, the

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trustee . . . Section 2932.5 applies to mortgages, in which the

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mortgagor or borrower has granted a power of sale to the mortgagee

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or lender.")

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C.

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To state a prima facie claim for constructive fraud, a

Constructive Fraud

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plaintiff must allege (1) a fiduciary or confidential relationship;

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(2) an act, omission or concealment involving a breach of that

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duty; (3) reliance; and (4) resulting damage.

21

Fed. Bank, 82 Cal. App. 4th 399, 414 (Cal. Ct. App. 2000).

22

Plaintiff alleges that because Defendant knew it had no beneficial

23

interest in the Loan after its sale in October 2006, Defendant's

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post-sale behavior toward Plaintiff -- including taking payments on

25

the Loan and not revealing to Plaintiff that Defendant was going to

26

take out insurance and obtain Temporary Asset Relief Program

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("TARP") funds based on the Loan -- was fraudulent.

28

¶¶ 91-97.

Assilzadeh v. Cal.

See Compl.

Plaintiff also appears to contend that some of the

11

1

documents, at least the NOD, were forgeries.

Id.

2

Defendant argues that Plaintiff's fraud claim fails primarily

3

because Plaintiff fails to allege a fiduciary relationship between

4

himself and Defendant, and that Plaintiff could not do so as a

5

matter of law, since Defendant was proceeding in the capacity of an

6

ordinarily lender of money and therefore was not in a fiduciary

7

relationship with Plaintiff.

8

Wash. Mut. Bank, 637 F. Supp. 2d 700, 710 (N.D. Cal. 2009)).

9

Defendant also contends that Plaintiff fails to plead fraud with

United States District Court

For the Northern District of California

10

particularity.

11

arguments, requesting only that he be given leave to amend his

12

complaint to allege justifiable reliance based on Glaski.

13

8.

14

Id. at 11.

MTD at 10-11 (citing Mangindin v.

Plaintiff does not join these

Defendant is correct on all points.

Opp'n at

First, Plaintiff's fraud

15

claim mixes theories, factual allegations, and outright legal

16

conclusions in a way that makes it impossible for the Court to find

17

Plaintiff's claims plausible and specific.

18

standards of Rules 8 and 9(b), which require only that Plaintiff

19

lay out the "who, what, when, where, and how" of his fraud claim in

20

a way that is minimally plausible.

21

This fails to meet the

Second, Plaintiff fails to allege a fiduciary relationship

22

anywhere in his complaint, and without that necessary element,

23

Plaintiff's constructive fraud claim fails as a matter of law.

24

any event, under California law, "a financial institution owes no

25

duty of care to a borrower when the institution's involvement in

26

the loan transaction does not exceed the scope of its conventional

27

role as a mere lender of money," and commercial lenders "[are]

28

entitled to pursue [their] own economic interests in a loan

12

In

1

transaction."

Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal.

2

App. 3d 1089, 1095–96 & 1093 n.1 (Cal. Ct. App. 1991) (citations

3

omitted).

4

financial institution exceeded its role as money lender and thus

5

owes a duty of care to a borrower-client involves "the balancing of

6

various factors, among which are (1) the extent to which the

7

transaction was intended to affect the plaintiff, (2) the

8

foreseeability of harm to him, (3) the degree of certainty that the

9

plaintiff suffered injury, (4) the closeness of the connection

In California, the test for determining whether a

United States District Court

For the Northern District of California

10

between the defendant's conduct and the injury suffered, (5) the

11

moral blame attached to the defendant's conduct, and (6) the policy

12

of preventing future harm."

13

Title Ins. Co., 155 Cal. App. 4th 339, 345 (Cal. Ct. App. 2007).

14

Heritage Oaks Partners v. First Am.

Neither party addresses these matters.

The Court finds that

15

the face of the complaint does not establish that Defendant has

16

exceeded its role as money lender and would therefore owe a duty of

17

care to Plaintiff.

18

Defendant's activities fall outside the Nymark rule.

19

the Court DISMISSES Plaintiff's constructive fraud claim with leave

20

to amend, provided that Plaintiff take careful note of the

21

guidelines above.

The Court therefore does not find that
Accordingly,

22

D.

California Civil Code Section 2934a(a)(1)(A)

23

Plaintiff asserts a claim against Defendant under California

24

Civil Code section 2934a(a)(1)(A), which provides that all

25

beneficiaries to a DOT must execute and record Substitutions of

26

Trustee if those instruments are to be effective -- otherwise the

27

substitution will be void.

28

referenced above is void under California law, because no

Plaintiff alleges that the trustee sale

13

1

beneficiary effectively executed or recorded a Substitution of

2

Trustee.

3

agreed, in executing the DOT, that Defendant could appoint

4

successor trustees, and that on August 11, 2011, Defendant caused

5

to be recorded a duly executed and acknowledged Substitution of

6

Trustee.

7

Plaintiff may have alleged that the SOTs were void, but Defendant

8

did not breach the procedural requirements of the Civil Code.

9

claim is DISMISSED WITH PREJUDICE.

Compl. ¶¶ 106-08.

Defendant argues that Plaintiff

ECF No. 26 ("Def.'s RJN) Ex. E. 1

Defendant is correct.

This

United States District Court

For the Northern District of California

10

E.

Unjust Enrichment

11

Plaintiff asserts an unjust enrichment claim against Defendant

12

on the theory that Defendant accepted loan payments to which it was

13

not entitled.

14

cause of action in California, and that in any event, Plaintiff

15

agreed to repay the money it borrowed, so Plaintiff fails to state

16

a claim based on Defendant's receipt of money it was not owed.

17

at 12-13.

Defendant argues that unjust enrichment is not a

MTD

California courts split on whether or not quasi contract is an

18
19

independent claim for relief.

Compare Davenport v. Litton Loan

20

Servicing, LP, 725 F. Supp. 2d 862, 885 (N.D. Cal. 2010)

21

(suggesting quasi contract can be its own basis for relief) with

22

Bernardi v. JPMorgan Chase Bank, N.A., No. 5:11-cv-04212 EJD, 2012

23

WL 2343679, at *3 (N.D. Cal. June 20, 2012) (holding unjust

24

enrichment is not an independent claim for relief).

25

because Plaintiff argues that it would be unjust to allow Defendant

26

to retain money procured through fraudulent or unenforceable

In this case,

27
28

1

The Court GRANTS Defendant's unopposed request for judicial
notice under Federal Rule of Evidence 201.

14

1

documents, the Court finds it equitable to allow Plaintiff's unjust

2

enrichment claim to stand on its own.

3

2d at 885.

4

See Davenport, 725 F. Supp.

Defendant's second argument -- that Plaintiff agreed to repay

5

money it borrowed and therefore cannot contend that Defendant

6

retained money unjustly -- ignores the fact that Plaintiff's claim

7

is based on his allegation that the relevant contract is void.

8

Defendant's motion to dismiss on this ground is DENIED.

9

Plaintiff's unjust enrichment claim survives.

United States District Court

For the Northern District of California

10

F.

UCL

11

The UCL prohibits unfair competition, which is defined as "any

12

unlawful, unfair or fraudulent business act or practice."

Cal.

13

Bus. & Prof. Code § 17200.

14

cause of action.

15

Co., 20 Cal. 4th 163, 180 (Cal. 1999).

16

under which prong he brings this claim, other than the fraudulent

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prong, and much of this claim does not actually map to what

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Plaintiff pled.

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Court finds that Plaintiff has adequately pled a UCL fraud claim,

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based on his allegation that Defendant's behavior, described above,

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is likely to deceive consumers.

Each one of these prongs is a different

Cel-Tech Comm'cns, Inc. v. L.A. Cellular Tel.

See Compl. ¶¶ 121.

Plaintiff does not specify

Despite this failing, the

See id. ¶¶ 119-121.

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Without addressing fraud, the sole UCL claim Plaintiff has

23

specifically pled, Defendant moves to dismiss this cause of action,

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arguing that the UCL requires a predicate legal violation and that

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Plaintiff has failed to plead damages.

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is wrong.

27

action -- which are not necessarily required, except so far as the

28

unlawfulness prong borrows from violations of other laws, see Cel-

See MTD at 15.

Defendant

First, Plaintiff has adequately pled predicate causes of

15

1

Tech, 20 Cal. 4th at 180 -- and second, Plaintiff adequately

2

alleged damages, as discussed above.

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Plaintiff's UCL fraud claim survives, but Plaintiff's other

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UCL claims are DISMISSED without prejudice.

They are inadequately

5

pled, but Plaintiff has leave to amend his UCL claim in order to

6

explain how or whether Defendant violated the UCL unfairness or

7

unlawfulness prongs.

8

to the Unfair Practices Act ("UPA"), Cal. Bus. & Prof. Code § 17000

9

et seq., in his UCL claim are impermissibly vague and conclusory.

The Court finds that Plaintiff's references

United States District Court

For the Northern District of California

10

If Plaintiff chooses to re-allege any violations of the UPA, he

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must do so in accordance with Rule 8.

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G.

TILA

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Plaintiff alleges a TILA violation against Defendant for

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failing to record documents reflecting any defendant as a lawful

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lender, rendering the NODs and foreclosure sale fraudulent,

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defective, and void.

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ensure "a meaningful disclosure of credit terms so that the

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consumer will be able to compare more readily the various credit

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terms available to him and avoid the uninformed use of credit, and

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to protect the consumer against inaccurate and unfair credit

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billing and credit card practices."

22

King v. California, 784 F.2d 910, 915 (9th Cir. 1986); Hubbard v.

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Fid. Fed. Bank, 91 F.3d 75, 79 (9th Cir. 1996).

24

Compl. ¶¶ 112-115.

TILA was enacted to

15 U.S.C. § 1601(a).

See also

Defendant moves to dismiss Plaintiff's TILA claim on three

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grounds: first, that the claim is time-barred because TILA has a

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one-year limitations period accruing upon consummation of the loan;

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second, that the claim does not allege specific facts that could

28

support recovery; and third, that Plaintiff's allegations about the

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1

Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et

2

seq., are inapposite because Defendant is not a debt collector, and

3

foreclosure pursuant to a DOT is not collection of a debt per the

4

FDCPA.

MTD at 13-14.

The Court finds for Defendant on all grounds.

5

Plaintiff does

6

not join any of these arguments in his opposition brief, but

7

regardless, Plaintiff filed his complaint seven years after the

8

Loan documents were executed, so the claim is time-barred.

9

U.S.C. § 1640(e).

15

Further, Plaintiff's TILA claim fails to plead

United States District Court

For the Northern District of California

10

specific, plausible facts as to how Defendant violated TILA.

See

11

Comp. ¶¶ 112-15.

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DOT is not debt collection per the FDCPA.

13

Home Mortg. Serv., Inc., No. 11–CV–03678–LHK, 2011 WL 6141047, at

14

*4 (N.D. Cal. Dec. 9, 2011) ("non-judicial foreclosure does not

15

constitute 'debt collection' as defined by the [FDCPA]"); Garfinkle

16

v. JPMorgan Chase Bank, N.A., No. C 11-01636 CW, 2011 WL 3157157,

17

at *3 (N.D. Cal. July 26, 2011) (collecting cases).

Finally, as Defendant notes, foreclosure under a
See, e.g., Garcia v. Am.

Plaintiff's TILA claim is DISMISSED with leave to amend, so

18
19

that Plaintiff can explain how (if so) his TILA claim's statute of

20

limitations is tolled.

21

civil damages claims brought under TILA may, in the appropriate

22

circumstances, suspend the limitations period until the borrower

23

discovers or had reasonable opportunity to discover the fraud or

24

nondisclosures that form the basis of the TILA action).

25

may not reassert a TILA claim that depends on the FDCPA.

26

portion of the claim is DISMISSED WITH PREJUDICE.

27

///

28

///

King, 784 F.2d at 915 (equitable tolling of

17

Plaintiff
That

1

H.

Declaratory Relief

2

Plaintiff seeks declaratory relief under California Code of

3

Civil Procedure section 1060, in order to decide the rights and

4

interests of Plaintiff and Defendant and to issue an injunction as

5

to Defendant's behavior.

6

specificity, and in any event, declaratory relief is a remedy, not

7

a cause of action.

Compl. ¶¶ 132-37.

This claim lacks

This claim is DISMISSED WITH PREJUDICE.

8
9

V.

As explained above, the Court GRANTS in part and DENIES in

United States District Court

10
For the Northern District of California

CONCLUSION

11

part Defendant Wells Fargo Bank N.A.'s motion to dismiss Plaintiff

12

Karthik Subramani's first amended complaint.

13

follows:

14

(1)

Plaintiff's wrongful foreclosure claim is undisturbed.

15

(2)

Plaintiff's constructive fraud claim is DISMISSED with

The Court orders as

leave to amend.

16
(3)

17

Plaintiff's cancellation of fraudulent instruments claim
is undisturbed.

18
(4)

19

Plaintiff's claim under California Civil Code section
2934a(a)(1)(A) is DISMISSED WITH PREJUDICE.

20
21

(5)

Plaintiff's unjust enrichment claim is undisturbed.

22

(6)

Plaintiff's TILA claim is DISMISSED with leave to amend.

23

(7)

Plaintiff's UCL fraud claim is undisturbed, but his

24

claims under the unfair and unlawful prongs of the UCL

25

are DISMISSED with leave to amend.
(8)

26

PREJUDICE.

27
28

Plaintiff's declaratory relief claim is DISMISSED WITH

///

18

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2

Plaintiff is on notice that any amended pleading must comport
with Rules 8 and 9(b).

3
4

IT IS SO ORDERED.

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30
Dated: October ___, 2013

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UNITED STATES DISTRICT JUDGE

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United States District Court

For the Northern District of California

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